Start spreading the news: New York City is proving to be a standout hotel performer of the fourth quarter.
In the latest episode of "Tell Me More: A Hospitality Data Podcast," CoStar National Director of Hospitality Analytics Jan Freitag and STR Vice President of Analytics Isaac Collazo take a bite out of the Big Apple to uncover what’s really driving its standout occupancy and rate growth numbers.
New York City notched an average daily rate of $359.65 in October, up nearly 10% compared to the same month last year, Freitag pointed out. Collazo added that the city also led the nation in occupancy during several critical stretches this year, including October year to date, April through August and in September and October.
And while strong group and leisure demand play a role in that, Collazo and Freitag underscore that there’s always more to the story, particularly in New York City.
“At the end of the day, it’s supply constraints” in New York City, Collazo said. “If you peel back that onion, you see a lot of the supply loss has been on the lower end of the spectrum and that’s where you’re seeing a lot of ADR growth, because there’s not many low-price hotels available … so you’re seeing strong ADR growth.”
Two other issues factor in to New York City’s supply picture: the city’s crackdown on short-term rentals and the number of hotel rooms converted to housing for migrants, refugees and unhoused people.
Room supply in New York City was down 3.3% in October, Freitag said. But while supply is coming out of inventory, the pipeline “is still fairly strong,” he said.
The Recession Question
After much back-and-forth in recent podcast episodes, Collazo and Freitag reached a consensus that a U.S. recession won’t happen this year.
“I don’t see the signs yet,” Collazo said. “November was supposed to be the point where we saw the signs. And then December. So I’m waiting. I’ll continue to wait.”
Freitag shifted his previous opinion and conceded that it likely won’t happen this year. He backed that up with Oxford Economics’ revised stance.
“They always said the fourth quarter was when it would start … and now they’re saying it’s not going to be a contraction, it’s going to be a bumpy road ahead and we still don’t really believe consumer spending is sustainable, but no recession,” he said.
He cited STR and Tourism Economics’ latest forecast revision released in late November lifting this year’s revenue-per-available-room forecast to 4.8% growth
“Now I’m on the new bandwagon where I say no recession,” he said.
More From This Episode
In this episode, Collazo and Freitag also discuss:
- October’s record-breaking hotel group demand: Group demand in upper-upscale and luxury-class hotels hit the highest level for any single month since October 2018, according to CoStar data.
- The hotel supply picture across the total U.S.
- How hotel performance in Las Vegas shook out after the recent Formula 1 race.
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